What is driving Japanese interest in India?
The future of India is very promising. From a demographic perspective, you have a lot of advantages. Besides wages, the working age population is still increasing, which is totally opposite from Japan. You have a stable democratic framework with robust digital infra. And beyond that you are inducing people to come and make in India (with) start-up India, production-based incentives and so on. The Japanese are looking for areas where they can grow. So, India is a very promising area. Also, Japan and India have a long-standing relationship sharing the same values, having sympathy towards each other. So, that gives Japanese companies confidence to invest here.
Where does India fit into Mizuho’s plans?
There are 1,400 Japanese companies operating here and we bank with many of them. Many of these want to expand here. But there is also interest among Japanese companies to come here for the first time.
We want to be supportive of the growth of Indian and Japanese companies. Also, we want to commit to the growth of India because both countries have been friends for many years. So, for us, India is a very important country. In November 2023, we increased our capital base to $500 million, so that our Indian operation can extend more lending.
Are you likely to make more investments in India?
I think at some point, we probably will need additional capital to inject here. And I’m happy to do that if there’s a need for that.
What would be the trigger for you to inject more capital?
We have (invested) $500 million and based on the needs that we get from our customers I think it’s sufficient right now. But as this country grows, I guess there will be much more for companies asking for lending.
Any acquisitions that you’re looking at in India?
First of all, in terms of organic, we focus on five business areas: Japanese retail; asset management and wealth management in Japan; Japanese corporates; global corporate investment banking and sustainability. We are constantly looking at opportunities in these areas. So, I can’t allude to what will happen in India.
There have been reports about Mizuho acquiring a majority stake in Avendus Capital. What is the status?
I can’t allude to that. No comments.
Will corporate banking continue to be your focus in India?
We are particularly very good at corporate wholesale banking. In the global space, I think we should stick to wholesale banking because regional retail banking is very difficult. Wholesale banking is the area where we have expertise, we have strength.
Given the global uncertainties in terms of rates, markets, trade and political tensions, what is your view on growth?
Of course, there’s a lot of uncertainties but at some point things will get clear. Then everybody will start adjusting to a new world order. So, I would say given that there’s uncertainty from a global perspective, the activity might be slow. But once things get clear, activity will come back.
Does it change the way you invest in India or will you have to relook at your plans here?
I think India is a little bit insulated from all these things. I would say that India is a bit of a different story. Very different from Japan. So, we won’t change what we were going to do in India.
What would be the impact of the US tariff war on India?
The effect on India is probably minimal. You might even benefit from production moving into India from other countries, given the fact that maybe the tariff rate is lower than the other countries. What is happening is that corporations are thinking of diversifying their supply chain from a stability perspective. Everybody is thinking about moving into areas that have growth potential. So, India is in a good position from that perspective.
What advantages do you think India has over China?
In the long run, the working age population, I think that’s the most important part. For India it is going to grow. China is going to decrease. That’s a big advantage.
What are your plans on the global capability centre in India?
We have around 600 people and we want to double that in two or three years and move in more and more operations here in India because India has a talent pool.
Which are the sectors you’re very optimistic about?
In India there is ambition to grow in manufacturing from auto electronics, semiconductors and infrastructure. Increasingly, when the per capita (income) goes up, there should be increasing demand for retail too. India is constructing airports, highways, railroads. We have done many projects in the infrastructure sector. We have also beefed up the project finance team recently.
The top 3 Japanese banks are here in India with deep pockets. How would you differentiate between yourselves and them?
We at Mizuho are very good at industry research. We have a very strong global corporate and investment banking franchise, developed from 2015 when we purchased assets from RBS and onboarded 100 relationship managers. We want to integrate every capability that we need in the investment bank inside our bank, to get synergies between those capabilities. Based on these strengths, we’ll try to bring all these capabilities into India too, and I think we can be competitive on them.
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